AMENDED AND RESTATED SPECIAL TERMINATION AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the twenty-sixth day of
November, 1997 by and among Medford Savings Bank a Massachusetts savings bank
with its main office in Medford, Massachusetts (the "Bank"), Medford Bancorp,
Inc. a Massachusetts corporation (the "Company") (the Bank and the Company shall
be hereinafter collectively referred to as the "Employers"), and Phillip W. Wong
of Medway, Massachusetts (the "Executive").
1. Purpose. In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services to be rendered by the Executive to the Employers
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by the Employers, the Employers are willing to provide,
subject to the terms of this Agreement, consequences of a Terminating Event (as
defined in Section 3) occurring subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(i) if there has occurred a change in control of either the
Company or the Bank which the Company would be required to report in
response to Item 1 (or, in the case of the Bank, Item 2) of Form 8-K
promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or, if such regulation is no longer in effect, any
regulations promulgated by the Securities and Exchange Commission,
pursuant to the 1934 Act, which are intended to serve similar purposes;
(ii) when any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act), directly or
indirectly, of securities of the Company or the Bank representing
twenty-five percent (25%) or more of the total number of votes that may be
cast for the election of directors of the Company or the Bank, as the case
may be;
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who are
Continuing Directors (as hereinafter defined) cease for any reason to
constitute at least a majority of the Board of Directors of the Company or
the Bank. For this purpose, a "Continuing Director" shall mean (a) an
individual who was a director of the Company or the Bank at the beginning
of such period or (b) any new director (other than a director designated
by a person who has entered into an agreement with the Company or the Bank
to effect a transaction described in clause (ii), (iv) or (v) of this
Section 2) whose election by the Board or nomination for election by the
Company's or the Bank's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors of the Company or the Bank, as
appropriate, then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved;
(iv) the stockholders of the Company approve a merger or
consolidation of the Company or the Bank with any other corporation or
bank, other than (a) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined
voting power of the Company's then outstanding securities; or
(v) the stockholders of the Company or the Bank approve a plan of
complete liquidation of the Company or the Bank or an agreement for the
sale or disposition by the Company or the Bank of all or substantially all
of the Company's or the Bank's assets.
(vi) Notwithstanding the foregoing, no Change in Control shall be
deemed to occur by virtue of the Bank becoming a subsidiary of the
Company.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by either of the Employers of the employment of the
Executive with either of the Employers for any reason other than (i) death, (ii)
deliberate dishonesty of the Executive with respect to the Bank or the Company
or any subsidiary or affiliate of either, or (iii) conviction of the Executive
of a crime involving moral turpitude, or
(b) resignation of the Executive from the employ of both of the Employers,
while the Executive is not receiving payments or benefits from either of the
Employers by reason of the Executive's disability, subsequent to the occurrence
of any of the following events:
(i) a significant change in the nature or scope of the Executive's
responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by
the Executive immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a Change in
Control, he is unable to exercise the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior
to such Change in Control; or
(iii) a reduction in the Executive's annual base salary as in effect on
the date hereof or as the same may be increased from time to time except
for across-the-board salary reductions similarly affecting all management
personnel of the Employers and all management personnel of any person in
control of the Employers; or
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(iv) the failure by the Employers to pay to the Executive any portion of
his current compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Employers within seven (7) days of the date such
compensation is due; or
(v) the failure by the Employers to continue in effect any material
compensation, incentive, bonus or benefit plan in which the Executive
participates immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by the
Employers to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as existed at
the time of the Change in Control; or
(vi) the failure by the Employers to continue to provide the Executive
with benefits substantially similar to those available to the Executive
under any of the life insurance, medical, health and accident, or
disability plans or any other material benefit plans in which the
Executive was participating at the time of the change in Control, or the
taking of any action by the Employers which would directly or indirectly
materially reduce any of such benefits, or the failure by the Employers to
provide the Executive with the number of paid vacation days to which the
Executive is entitled on the basis of years of service with the Employers
in accordance with the Employers' normal vacation policy in effect at the
time of the Change in Control; or
(vii) the failure of the Employers to obtain a satisfactory agreement from
any successors to assume and agree to perform this Agreement.
4. Severance Payment. In the event a Terminating Event occurs within three
(3) years after a Change in Control, the Employers shall pay to the Executive an
aggregate amount equal to (x) two times the "base amount" (as defined in Section
280 G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"))
applicable to the Executive, less (y) One Dollar ($1.00), payable in one
lump-sum payment on the date of termination.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Employers that no
payments by the Employers to or for the benefit of the Executive under this
Agreement or any other agreement or plan pursuant to which he is entitled to
receive payments or benefits shall be non-deductible to the Employers by reason
of the operation of Section 280G of the Code relating to parachute payments.
Accordingly, and notwithstanding any other provision of this Agreement or any
such agreement or plan, if by reason of the operation of said Section 280G, any
such payments exceed the amount which can be deducted by the Employers, such
payments shall be reduced to the maximum amount which can be deducted by the
Employers. To the extent that payments exceeding such maximum deductible amount
have been made to or for the benefit of the Executive, such excess payments
shall be refunded to the Employers with interest thereon at the
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applicable Federal Rate determined under Section 1274(d) of the Code, compounded
annually, or at such other rate as may be required in order than no such
payments shall be non-deductible to the Employers by reason of the operation of
said Section 280G. To the extent that there is more than one method of reducing
the payments to bring them within the limitations of said Section 280G, the
Executive shall determine which method shall be followed, provided that if the
Executive fails to make such determination within forty-five days after the
Employers have sent him written notice of the need for such reduction, the
Employers may determine the method of such reduction in their sole discretion.
(b) If any dispute between the Employers and the Executive as to any of
the amounts to be determined under this Section 5, or the method of calculating
such amounts, cannot be resolved by the Employers and the Executive, either the
Employers or the Executive after giving three days written notice to the other,
may refer the dispute to a partner in the Boston office of a firm of independent
certified public accountants selected jointly by the Employers and the
Executive. The determination of such partner as to the amount to be determined
under Section 5(a) and the method of calculating such amounts shall be final and
binding on both the Employers and the Executive. The Employers shall bear the
costs of any such determination.
6. Employment Status. This Agreement is not an agreement for the
employment of the Executive and shall confer no rights on the Executive except
as herein expressly provided.
7. Term. This Agreement shall take effect as of the date hereof and shall
terminate upon the earlier of (a) the termination by the Employers of the
employment of the Executive because of death, deliberate dishonesty of the
Executive with respect to the Bank or the Company or any subsidiary or affiliate
of either, or conviction of the Executive of a crime involving moral turpitude,
(b) the resignation or termination of the Executive for any reason prior to a
Change in Control, or (c) the resignation of the Executive after a Change in
Control for any reason other than the occurrence of any of the events enumerated
in Section 3(b)(i)-(vii) of this Agreement.
8. Withholding. All payments made by the Employers under this Agreement
shall be net of any tax or other amounts required to be withheld by the
Employers under applicable law.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 9. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the Executive's
rights under this Agreement, the Employers shall pay (or the Executive shall be
entitled to recover from the Employers, as the case may be) the Executive's
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reasonable attorneys' fees and other reasonable costs and expenses in connection
with the enforcement of said rights (including the enforcement of any
arbitration award in court) regardless of the final outcome, unless and to the
extent the arbitrators shall determine that under the circumstances recovery by
the Executive of all or a part of any such fees and costs and expenses would be
unjust. This provision shall not apply to Section 5(b), except in the event that
the Employers and the Executive cannot agree on the selection of the accounting
partner described in said Section.
10. Allocation of Obligations. The Bank and the Company shall allocate
among themselves which party shall be responsible for paying the severance
payments and other benefits directed by this Agreement. The payment by either
party of such severance payments and other benefits shall satisfy the
obligations of the non-paying party under this Agreement. Both the Bank and the
Company shall be jointly liable in the event of a failure by both parties to pay
such severance payments and other benefits.
11. Assignment; Prior Agreements. Neither the Employers nor the Executive
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Bank of all payments due him under this
Agreement, the Employers shall continue such payments to the Executive's
beneficiary designated in writing to the Employers prior to his death (or to his
estate, if he fails to make such designation). This Agreement supersedes any
prior agreement covering the subject matter hereof.
12. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the Bank,
or, in the case of the Employers, at both of their main offices, attention of
the Board of Directors.
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15. Election of Remedies. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Executive of any employment agreement between the Employers and
the Executive and shall not be deemed a voluntary termination of employment by
the Executive for the purpose of interpreting the provisions of any of the
Employers' benefit plans, programs or policies. Nothing in this Agreement shall
be construed to limit the rights of the Executive under any employment agreement
he may then have with the Employers; provided, however, that if there is a
Terminating Event under Section 3 hereof, the Executive may elect either to
receive the severance payment provided under Section 4 or such termination
benefits as he may under any such employment agreement, but may not elect to
receive both.
16. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by duly authorized representatives of
each of the Employers.
17. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Bank, by its duly authorized officer, by the Company, by its
duly authorized officer, and by the Executive, as of the date first above
written.
WITNESS:
/s/ Gregory J. Lyons /s/ Phillip W. Wong
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Phillip W. Wong
ATTEST: MEDFORD SAVINGS BANK
Eugene R. Murray By: /s/ Arthur H. Meehan
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Clerk Title: Chairman, President and
Chief Executive Officer
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[Seal]
ATTEST: MEDFORD BANCORP, INC.
Eugene R. Murray By: /s/ Arthur H. Meehan
- ------------------------ --------------------------
Clerk Title: Chairman, President and
Chief Executive Officer
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[Seal]
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